Insurance Tax Break Guidelines 'months Away'

The head of Hong Kong’s insurance regulator said on Thursday that it will take months to draw up guidelines for proposed tax concessions on a type of insurance product known as deferred annuities.

Financial Secretary Paul Chan on Wednesday directed the Insurance Authority to determine exactly what kind of deferred annuity products should be given tax concessions.

In such agreements, investors generally make regular payments to insurance companies for a specified time period, in return for regular payments afterwards. These products are commonly used by people saving for retirement.

The CEO of the Insurance Authority, John Leung, said the body will be discussing details with the government; industry representatives and other stakeholders in the near future, to try to work out exactly what kinds of products should get tax exemptions.

He said key factors include the premium amount, the length of the investment period, and the duration of the annuity distribution.

Leung said at this early stage, he’s of the view that annuity products that run for under 10 years may not be suitable.

However, he said full guidelines will likely be released in the second half of the year.

Paul Chan proposed the tax concessions in his budget on Wednesday to encourage the development of the deferred annuity market, saying this will give more options to people who are making financial arrangements for retirement.